REGULATIONS:

Bush's rulemaking czar blasts EPA's use of 'guidance'

As businesses and states challenge U.S. EPA's new regulations on greenhouse gas emissions, coal mining and water pollution, they are putting increasing pressure on the agency's use of "guidance" to explain the rules of the road.

Agencies have used guidance documents for decades to explain how they will interpret existing laws, often while they are working on new regulations. But some of the Obama administration's memos have been maligned by businesses, which say that the guidance documents are being used to change the rules without taking public comment or consulting with the rest of the administration.

That argument got support yesterday from John Graham, an influential academic who was in charge of reviewing new regulations for the White House under President George W. Bush.

Agencies have tried to argue that guidance documents are innocuous because they are not final rules, Graham said yesterday at a U.S. Chamber of Commerce event on "restoring balance to the regulatory process." But those memos have been used during both Republican and Democratic administrations to skirt public comment and avoid triggering review by the White House, he said.

"The whole idea of guidance not being a rule -- there has to be an arrow shot right through the heart of that," Graham said, adding that Congress should pass legislation "to make sure that things that look like a duck and quack like a duck are a duck."

Graham cited EPA's guidance for its new climate regulations, which tells state agencies how to decide whether new industrial plants are using the best available technology to cut down on emissions that are causing climate change.

But other recent memos from EPA, mainly on water quality issues, have prompted lawsuits from the National Mining Association, Kentucky Coal Association and state of West Virginia.

After the agency released new guidance on the acceptable impacts of mountaintop-removal mining on nearby streams, federal officials would not approve permits that were similar to ones that were given out before, the mining groups have argued in federal district court in Washington, D.C. The National Mining Association scored an early victory in January when District Judge Reggie Walton said he was likely to reject the guidance for the reasons outlined by Graham and other critics.

Officials are using the 2009 and 2010 memos to make decisions on about 190 applications for coal-mining projects, and "it appears that the EPA is treating the guidance as binding," Walton wrote (E&ENews PM, Jan. 18).

Supporters of EPA's rules, including health and environmental groups, have described the Republican push to pass regulatory reform bills as a political play to stop federal agencies from making businesses spend money on protections for the public.

The reason for the criticism of regulation "is not that it doesn't work but that it does," said David Goldston, director of government affairs at the Natural Resources Defense Council, during testimony on Capitol Hill. "The complaint is rather that those on the right end of the political spectrum do not always win" (E&E Daily, March 9).

But the guidance documents in particular have also frustrated some state officials, who use the memos to make decisions on local projects.

The Environmental Council of the States (ECOS), which represents top officials from state environmental agencies, will consider a resolution on guidance during its spring convention next week, said Steven Brown, the group's executive director and a former state air official in Kentucky.

Though the organization does not yet have a formal position, Brown recently wrote a paper slamming EPA's handling of coal mining and water permits. The new administration should not be using guidance to speed along the rulemaking process, he told Greenwire during a recent interview.

"There's a desire among some people to right what they believe is an environmental wrong," Brown said. "That's fine. They should do that. But they should use the laws and procedures that are in place, and the court decisions over the years, to do it -- not come up with some cheap shortcut that is impossible for states to implement."

States often welcome advice from EPA on new rules, but the agency has created a problem by rejecting state permits that do not follow the guidance, Brown said. That creates legal problems, especially in places where state law doesn't allow environmental requirements to be stricter than the federal rules that are in place, he said.

In West Virginia alone, hundreds of water permits for coal-mining projects were being held up last year when former Gov. Joe Manchin (D) asked Environment Secretary Randy Huffman to go to court, according to the state.

"One could certainly imagine what life would be like if sheriff's offices took such shortcuts, or the FBI did," Brown said. "It wouldn't be a very pleasant place to live, now would it?"

Tables turned

Graham's own tenure at the White House was marked by frequent fights over regulatory policy.

Back then, Democrats and their allies complained that Graham's office seemed more interested in saving money for businesses than protecting the public from health and environmental threats. A supporter of strict cost-benefit analysis, Graham made enemies with the AARP after his office suggested putting a lower value on saving the lives of the elderly, based on the fact that they have fewer years left to live.

Graham is also a longtime critic of guidance documents. Two years into the George W. Bush administration, when Graham was administrator of the White House Office of Information and Regulatory Affairs, President Bush issued an executive order telling agencies to send major policy memos to Graham's office for review.

Now the head of Indiana University's School of Public and Environmental Affairs, Graham said yesterday that change in policy was prompted in part by memos that were coming from EPA. He recalled being summoned to speak with then-OMB Director Mitch Daniels, who is now governor of Indiana and is seen as a possible contender for the 2012 Republican presidential nomination.

The year was 2003, and Daniels said the Pentagon had complained about EPA's plans for cleaning up perchlorate, a component of rocket fuel that is linked to thyroid problems and can contaminate drinking water supplies. He asked Graham what his office was doing about it, but Graham did not know what Daniels was talking about.

"To make a long story short, I wasn't doing anything about it, because it was a so-called guidance document," Graham said yesterday.

Democrats and supporters of new regulations attacked the executive order at the time, saying the White House was trying to slow down the regulatory process. But now that a Democrat is sitting in the White House, the tables have turned.

Soon after taking office, President Obama revoked the Bush-era executive order on guidance. It was replaced with a memo saying the White House reserves the right to review guidance documents.

And last month, EPA announced that it will reverse the last administration's decision and consider setting new federal drinking water standards for perchlorate (Greenwire, Feb. 2)

Now that Republicans have taken back the House, they are trying to turn back a tide of regulations that they describe as harmful to the economy. The effort is being led by business groups such as the U.S. Chamber of Commerce, the nation's top lobbying group in terms of spending.

Just last month, Obama visited the chamber's Washington headquarters, directly across from the White House, to talk about efforts to restore the economy. He promised to knock down burdensome rules as part of a new regulatory review initiative but added that "the perils of too much regulation are matched by the dangers of too little."

Sen. Susan Collins (R-Maine) has tackled the issue by proposing an amendment to the small-business bill that is currently on the Senate floor. Her measure would make federal agencies do a cost-benefit analysis on guidance documents, but it has not gotten a vote so far.

The Collins amendment is one of several proposals to overhaul the regulatory process. Another bill from Rep. Geoff Davis (R-Ky.) and Sen. Jim DeMint (R-S.C.), called the "REINS Act," would make Congress approve all major regulations. A third suggestion from Sen. Mark Warner (D-Va.) would borrow a concept from pay-as-you-go budgeting and make agencies get rid of one outdated rule before putting a new one on the books.

So far, the REINS Act has gotten the most traction in Congress, but Graham said yesterday that he is skeptical that the proposal will pass. It would be "veto bait for virtually any president" because it would take power away from the executive branch, he said.

With any bill, Congress should be careful about stopping agencies from doing their work, said Paul Verkuil, who was appointed by President Obama to chair the Administrative Council of the United States. Officials start using guidance and other work-arounds when it becomes more difficult to do the job that Congress has asked of them, he told the audience at the U.S. Chamber's headquarters.

"You can't blame an agency," Verkuil said. "Everyone is sworn in to uphold the law and the Constitution, and they have to worry about their mission, so we don't want to tie their hands too much."